Tim Sielaff, executive fellow at the University of St. Thomas Opus College of Business, spoke with Twin Cities Business about the growing financial strain facing hospitals in Minnesota as rising labor costs, inflation and inadequate insurance reimbursements put pressure on health systems.
From the article:
The Minnesota Hospital Association says we have a problem. More than 30 nonprofit hospitals in the state are out of cash to make payroll.
The Hennepin County Medical Center (HCMC) was trending toward that scary position recently. Leadership had claimed all of this year that the state’s flagship safety-net hospital would close in June if it did not receive financial assistance from the Minnesota Legislature. ...
The Role Labor Costs Play
Labor costs are the No. 1 cost for any health system. According to the American Hospital Association (AHA), employee wages, benefits, and contract labor typically account for 50–60% of a hospital’s total operating expenses. “It’s a people-intensive industry,” says Tim Sielaff, executive fellow at the University of St. Thomas Opus College of Business. Sielaff previously served as chief medical officer of Allina Health for five years. ...
“The inflation in the cost of doing business was not supported by the insurance reimbursement structure,” Sielaff explains. “That is a substantial challenge. A safety-net hospital has a different set of challenges than other health systems.” Namely, safety-net hospitals such as HCMC tend to rely heavily on Medicaid and Medicare.
